Life & Health Insurance Practice Exam 2025 – 400 Free Practice Questions to Pass the Exam

The Actuarial Department is tasked with calculating policy rates, reserves, and dividends because it specializes in analyzing statistical data related to insurance. Actuaries use mathematical models to assess risk and determine the premium amounts that policyholders should be charged, ensuring that the insurer can cover future claims while maintaining profitability.

Additionally, they are responsible for setting aside reserves, which are funds that an insurance company must hold to pay future policyholder claims. This requires a deep understanding of mortality rates, policy lapses, and other factors that influence insurance payouts. Dividends, which are a return of surplus profits to policyholders in mutual insurance companies, are also calculated based on actuarial principles.

The Claims Department primarily focuses on processing and settling claims made by policyholders, not on setting rates or calculating reserves. Similarly, the Underwriting Department assesses risk to determine whether to accept applications but does not engage in the calculation of policy rates or reserves. The Compliance Department ensures that the insurance company adheres to legal and regulatory requirements, but it does not calculate policy rates or dividends either. Thus, the responsibilities of the Actuarial Department are essential for the pricing and financial stability of insurance products.